Divorce Team

You’re going through a divorce. You may feel that you’re watching your life crumble, including your finances. It’s tempting to want to save money by doing it all yourself. Whether ending the marriage was your idea or not, it’s a time when you’ll be making big decisions that are different than any decisions you’ve ever had to make. It’s not time to be penny wise and pound foolish. Because divorce isn’t an everyday occurrence, here are some pointers that can help you and save you money.

Too many people assume attorneys make things worse. With a good attorney, that’s not true. Many people have never had another reason to hire an attorney, so they don’t know a good attorney from a bad one. In a divorce, part of being a good divorce attorney is assuming you’ll be able to negotiate a settlement without going to court, but being willing to go to court if needed. Also, a good attorney isn’t going to make promises about the outcome. There is a range of potential outcomes if you go to court. So an attorney can give you an idea of what to expect, but very few guarantees.

A financial expert who specializes in divorce can be a huge help. Generally, the financial expert will be able to do some calculations to show you what several different financial settlements will look like. This expert will cost less per hour than an attorney and can go to court to testify in your case if necessary. A good financial professional who doesn’t usually do work on divorce cases may come up with some great ideas, but if those ideas won’t make it through a negotiation or a court hearing, it’s not the help you need.

If you have minor children, you might need some professional input there. Good parents generally agree that the well being of their children is the most important concern in a divorce. Many parents can come to a parenting agreement that works without professional help. But don’t hesitate to hire a parenting specialist if you can’t agree on issues about your kids.

Maybe the most important professional for you in a divorce is a therapist. Friends and family are important for emotional support, but sometimes they tell us what we want to hear. A good therapist helps you move forward with your new life. Therapy doesn’t have to be a long term commitment. Divorce is a huge life transition. Some objective help is worthwhile.

Once a divorce is finished, the courts aren’t generally inclined to allow people to have a “do over” because one of the former spouses changed their mind. The decisions you’re making will impact the rest of your life and they’re not the type of choices you make all the time. You owe it to yourself to make well thought out decisions and professionals can help you do that.

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Friendly Advice

We all get advice from our friends, whether we want it or not. When it comes to financial advice from your friends, take it with caution.

Many people are Do-It-Yourselfers when it comes to their finances. As a financial professional, I’ve seen people who are pretty good at it. I generally meet them when they come to see me for a sanity check. There’s always something I can recommend that they didn’t think of and they appreciate it. But some Do-It-Yourselfers are a mess – and the mess is compounded by the fact that they don’t know that they’re a mess. So your buddy who makes all his own financial decisions through reading (which may be giving him bad information) or his own brand of logic (which may be illogical) may be unintentionally giving you bad advice.

Another pitfall of friendly advice is that your friend’s situation may be different from yours. So what your BFF from college is doing may be perfect for her, but doesn’t fit you. Perhaps she has more money than you, or less money that you. Maybe you have the same saved in investments, but her tax situation is much more complex than yours, which impacts everything else she does with her money. Several years ago I was proposing a tax credit to a prospective client. It was pretty complicated and at some point as he was struggling with whether or not to get involved in the credit, I told him I owned this same tax credit. That gave him lots of comfort, but I felt like it gave him a little too much comfort, so I told him that I was also wearing a red dress, but that the red dress wouldn’t look good on him. Financial advice isn’t “one size fits all”.

So take the advice of your friends with caution. Get advice from a professional who’s looking out for you – without their own agenda clouding that advice.

Finding a Financial Advisor that’s Right for You

If you want financial planning, finding a professional to guide you through the process is a daunting proposition.   Even referrals aren’t always the solution, since many of your friends might not completely understand what their financial advisor does or whether what’s done is right for them.   Finding a financial planner can be intricate and in depth.  There are also a few simple concerns you can explore to work toward finding a professional that’s a good fit for you.  Here are four basic issues you can address. 

The first is what the planner’s credentials are.  Credentials are different from licenses.  So having a securities license, insurance license, or a title from a financial institution will not automatically provide the training to qualify an individual for financial planning.  Financial advisors who are Certified Financial Planners have the training and experience to provide financial planning.  This incorporates, but isn’t limited to, investments, taxes, retirement planning, estate planning, cash flow and insurance. 

The next step is to ask how the planner is compensated.  A fee-only planner doesn’t need to sell you products like investments or insurance to make a living.  The planner may be paid through a flat retainer, hourly, or some percentage of assets that are managed. 

The third question is what services the planner provides.  If you work for a living and all your financial needs must be met with what you earn, you might not need an advisor who specializes in people with a large inheritance.  And if you want someone who’ll incorporate all the pieces of your financial life, you won’t be best serviced by a planner who only manages investments. 

Another question to address is whether the planner has an obligation to do what’s in your best interest or if he works for a firm that requires that he provide certain products or services to all clients, even if the client doesn’t need them. 

So where can you find advisors that are likely to have answers to these questions that will make it easier for you to find one that works for you?  There are a couple of professional organizations that foster fee-only financial planners that have their clients’ best interests as their primary goal.  The National Association of Personal Financial Advisors (NAPFA) at  www.napfa.org and the Alliance of Cambridge Advisors at www.acaplanners.org have advisor search functions.  Also, the NAPFA site has a more in depth questionnaire you can use for more in depth interview questions.